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Task force eyes high workers’ comp costs

Lt. Gov. Matt Denn and members of a task force attempting to lower the cost of workers’ compensation insurance for businesses are pressuring Insurance Commissioner Karen Weldin Stewart to replace a firm that represents insurers here. .

Delaware businesses must pay workers’ comp policies to cover costs associated with workplace injuries. Business groups have expressed outrage with double-digit increases in policy prices over the last two years, and have pressed lawmakers for additional reforms to rein in costs.

The task force will meet next month with representatives from the National Council on Compensation Insurance, which represents insurers in 38 states and has broader access to medical cost data.

“If you look historically over the last few years at the states where they are the rating bureau, the differences between what they asked for and what was approved by the state is much smaller than what you see here,” Denn said. “The drama level associated with the rate process appears to be much lower.”

Task force members, including Republican and Democratic lawmakers, have not yet recommended that Stewart replace the Delaware Compensation Rating Bureau, which represents workers’ comp insurers in state regulatory hearings. But many blame bureau officials for much of the controversy surrounding higher insurance costs.

Rating bureau president Tim Wisecarver has not responded to requests for comment.

Deputy Insurance Commissioner Gene Reed said it is unrealistic to believe a different industry representative would dramatically alter the level of rate increases sought by the state’s workers’ comp insurers. Premiums are partly driven by Delaware’s unusually high costs to treat certain workplace injuries.

Under current law, Stewart decides which group represents insurance companies in regulatory reviews. “Before designating any new organization, the commissioner would need to hear a full proposal from the potential organization in order to make a well-reasoned decision,” Reed said.

In each of the last two years, the Delaware Compensation Rating Bureau has requested rate increases of more than 40 percent, proposals that have been met with outcries y from politicians and business groups.

Stewart later approved increases between 11 and 17 percent after independent financial analysts showed that the higher rates were not warranted by cost data.

In a speech at a state Bar Association event last month, Denn likened the rate-filing process to a “rug bazaar,” in which the rating bureau files abnormally high rate increase requests as a starting point for negotiations with state regulators.

Other task force members have called the maneuvering inappropriate, saying insurance rates should be based only on hard data.

“I think there’s been a real breakdown in faith between my constituency, who in this case are the employers, over whether the rating bureau is playing fair. It’s the state’s job, and in particular elected officials’ job, to re-establish that good faith,” said panel member Rep. Bryon Short, D-Highland Woods.

Delaware’s cost to treat common workplace injuries is the fourth highest in the country, despite two efforts to reform workers’ compensation laws, once in 2007 and another time last year, according to the Workers Compensation Research Institute.

The cost for pain injections in Delaware is 135 percent higher than the state median, the figures show. Delaware’s costs for an outpatient knee surgery top the state median by 52 percent.

Task force members say they are looking at measures to control rein in what hospitals charge to treat such injuries. Businesses whose workers perform physical and often dangerous work, including construction trades, pay the highest workers’ comp rates.

Contact Jonathan Starkey at (302) 983-6756, on Twitter @jwstarkey or at jstarkey@delawareonline.com.